India: Solar Rooftop Investment Program

The proposed $505 million sovereign-guaranteed Solar Rooftop Investment Program (SRIP) is a multitranche financing facility, consisting of $500 million financial intermediation loans and a $5 million capacity development technical assistance. As requested by the Government of India, Punjab National Bank is the borrower, and the India provided a sovereign guarantee to the Asian Development Bank for the SRIP. The SRIP intends to primarily finance large solar rooftop systems on industrial and commercial buildings on standalone or aggregated basis. Punjab National Bank's loans to subborrowers is priced based on Punjab National Bank's cost of funds and subproject-specific risks. The proposed accompanying technical assistance for $5 million is critical to integrate the building blocks of the Government of India's sector development initiative to ensure a viable market demand, by strengthening (i) Punjab National Bank's institutional capacity, and (ii) certain market development elements.

The proposed $505 million sovereign-guaranteed Solar Rooftop Investment Program (SRIP) is a multitranche financing facility, consisting of $500 million financial intermediation loans and a $5 million capacity development technical assistance. As requested by the Government of India, Punjab National Bank is the borrower, and the India provided a sovereign guarantee to the Asian Development Bank for the SRIP. The SRIP intends to primarily finance large solar rooftop systems on industrial and commercial buildings on standalone or aggregated basis. Punjab National Bank's loans to subborrowers is priced based on Punjab National Bank's cost of funds and subproject-specific risks. The proposed accompanying technical assistance for $5 million is critical to integrate the building blocks of the Government of India's sector development initiative to ensure a viable market demand, by strengthening (i) Punjab National Bank's institutional capacity, and (ii) certain market development elements. SRIP's value addition, inclusive of $330 million from ordinary capital resources and $170 million from Clean Technology Fund, is to facilitate India's transition to a low carbon economy and therefore contribute to the climate change goal of reducing greenhouse gas emissions by 441,700 tons of carbon dioxide equivalent annually, or about 11 million tons of carbon dioxide equivalent over the typical 25-year lifetime of rooftop solar systems.

Project Rationale and Linkage to Country/Regional Strategy

The Government of India (government) plans to expand the country's solar rooftop capacity by 40 gigawatts (GW) by 2022. To fuel India's economic growth, its power system will have to expand rapidly over the next decade. This is also to maintain national energy security and expand energy access to all people in India. To ensure environmental sustainability, the government places a high priority on renewable energy development. India's National Action Plan on Climate Change (prepared in 2008) outlines existing and future policies and programs addressing climate mitigation and adaptation. Under the plan, the government launched the Jawaharlal Nehru National Solar Mission (JNNSM) in 2010 to add 20 GW of grid connected solar energy by 2022. On 17 July 2015, the Union Cabinet approved a revised JNNSM proposal to increase the original 20 GW solar energy target to 100 GW by 2022, including 40 GW of rooftop solar energy generation. The proposed Solar Rooftop Investment Program would therefore (i) establish a solar rooftop financing facility at Punjab National Bank to provide dedicated debt financing to help India meet its 40 GW solar rooftop capacity target by 2022; and (ii) provide associated institutional capacity and market development support, leading to a pipeline of bankable subprojects.

Impact

Energy security provided to all in an environmentally sustainable manner, and renewable energy developed

Project Outcome

Description of Outcome

Solar rooftop capacity in India increased.

Progress Toward Outcome

Solar rooftop capacity addition is under progress in line with target set for the project.

PNB has launched a solar rooftop focused line with support from ADB and actively sourcing deals and building out its portfolio in the segment with a highly attractive product.

Project of 1MW capacity is sanctioned under the scheme. Capacity building of PNB and consultant recruitment for PNB and MNRE is under progress.

Geographical Location

Nation-wide

Summary of Environmental and Social Aspects

Environmental Aspects

Categorized as FI, treated as C. No separate environment and social management system is required.

Involuntary Resettlement

Categorized as FI, treated as C. No separate environment and social management system is required.

Indigenous Peoples

Categorized as FI, treated as C. No separate environment and social management system is required.

Stakeholder Communication, Participation, and Consultation

During Project Design

Extensive due diligence and consultation have been conducted.

During Project Implementation

Due diligence and consultation is under progress.

Business Opportunities

Consulting Services

All procurement to be financed under the multitranche financing facility would be carried out in accordance with Asian Development Bank (ADB)'s Procurement Guidelines (2015, as amended from time to time), following stated eligibility criteria. ADB encourages Punjab National Bank to require its subborrowers to adopt internationally competitive bidding procedures to the extent possible when the amount of the investment is unusually large and economy and efficiency can be gained through such procedures. For procurement of goods and services to be financed by subloans from the ADB loan, Punjab National Bank would ensure that prices are reasonable and that relevant factors, e.g., time of delivery, efficiency, reliability, suitability for the subproject, and (for consulting services) quality and competence are taken into account. Solar panels procured under the India domestic content requirement would not be eligible for financing under the Solar Rooftop Investment Program. ADB loan proceeds would be disbursed in accordance with ADB's Loan Disbursement Handbook (2015, as amended from time to time). ADB may provide Punjab National Bank with United States dollars as the currency of payment.

Procurement

All procurement to be financed under the multitranche financing facility would be carried out in accordance with Asian Development Bank (ADB)'s Procurement Guidelines (2015, as amended from time to time), following stated eligibility criteria. ADB encourages Punjab National Bank to require its subborrowers to adopt internationally competitive bidding procedures to the extent possible when the amount of the investment is unusually large and economy and efficiency can be gained through such procedures. For procurement of goods and services to be financed by subloans from the ADB loan, Punjab National Bank would ensure that prices are reasonable and that relevant factors, e.g., time of delivery, efficiency, reliability, suitability for the subproject, and (for consulting services) quality and competence are taken into account. Solar panels procured under the India domestic content requirement would not be eligible for financing under the Solar Rooftop Investment Program. ADB loan proceeds would be disbursed in accordance with ADB's Loan Disbursement Handbook (2015, as amended from time to time). ADB may provide Punjab National Bank with United States dollars as the currency of payment.

Responsible ADB Officer

Bhatt, Jigar Arvindbhai

Responsible ADB Department

South Asia Department

Responsible ADB Division

India Resident Mission

Executing Agencies

Punjab National Bank7, Bhikhaiji Cama Place

Timetable

Concept Clearance

18 Apr 2016

Fact Finding

24 May 2016
to 26 May 2016

MRM

20 Jul 2016

Approval

30 Sep 2016

Last Review Mission

-

Last PDS Update

26 Sep 2017

MFF Facility Concept 0095-IND

Financing Plan

Loan Utilization

Total (Amount in US$ million)

Date

ADB

Others

Net Percentage

Project Cost

500.00

Cumulative Contract Awards

ADB

330.00

-

0.00

0.00

%

Counterpart

0.00

Cumulative Disbursements

Cofinancing

170.00

-

0.00

0.00

%

TA 9187-IND

Financing Plan/TA Utilization

Cumulative Disbursements

ADB

Cofinancing

Counterpart

Total

Date

Amount

Gov

Beneficiaries

Project Sponsor

Others

0.00

5,000,000.00

0.00

0.00

0.00

0.00

5,000,000.00

-

0.00

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Contracts Awarded

Procurement Plan

About ADB

The Asian Development Bank (ADB) is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. It assists its members and partners by providing loans, technical assistance, grants, and equity investments to promote social and economic development.